Amy Cimetta, RE/MAX Estate Properties

Primary Menu

Tag: Hermosa Beach

If you ask agents in the South Bay what’s going on with the market, you get some puzzled looks.

The market that was red hot, all of a sudden is not. And it’s hard to put a finger on what is happening, whether it’s an anomaly or a sign of a downtrend or if we’re just plateauing.

I personally think we’re stuttering, but it may be indicative of a few environmental and economic conditions that may be temporary.

1. The volatility of the stock market was undeniably sobering. Whether people lost money or were just fearful that they were going to lose money, it put a damper on buyer mentality. Buyers may have pulled back, as they do, when they don’t feel flush with cash. As the market settles down, this feeling goes away and buyers may resume their hunger for purchasing real estate.

2. We all know that a great part of the southern California market has been propelled by Chinese money. And as of late, the exchange rate has shifted in favor of the USD. Costing them 10% more, the Chinese buyers seem to have pulled off from their purchasing frenzy… for now. On top of this, and maybe more importantly, the Chinese government has put new caps on the amount of yuan that can be withdrawn outside their country.

3. And finally, it’s hot. I mean it’s really hot. I go so far as saying, it’s “Africa hot”. I believe that the heat wave that has hit Los Angeles and the Beach Cities has an impact on real estate. And why not? We know that horrific winters on the east coast put a halt to the market there. It’s been so hot here in the South Bay… Hermosa, Redondo and Manhattan Beach have been experiencing weather in the high 80s which is normally unheard of at the beach. And people don’t know how to cope with it. There’s very little A/C, very little reprieve. I think to some extent people have actually been beaten by the heat. So there’s little motivation to go shopping for a home when all you want to do is stick your head under the faucet… which is not even kosher in the drought that we’re having.

So we’ll see in the coming months which direction the stock market and the temperature take. And we’ll see if this is just a hiccup or a sign of a slowdown to come.

Redondo Beach had 70 transactions in October, the highest number of the three Beach Cities. Manhattan Beach had 40 and Hermosa had 24.

The trend appears to still be going up. Inventory is still low, and there’s enough demand to continue to push prices up. I don’t think we’re going to see the frenzied pace that we saw in the beginning of 2013, but there will be plenty of activity.

The real estate industry could be tapered by the new Qualified Mortgage standards (effective as of January 10th) which require a borrower’s debt to income ratio to be no more than 43%. Of course, this could just mean that the big lenders are going to continue to grab the lion share of the business since they are less impacted by the QM guidelines; they can hold on to their loans rather than selling them on the secondary market which is dictated by Fannie and Freddie.

When you buy a home, your lender requires a copy of the purchase contract. They want to make sure that all the terms are met and their investment is protected. One of the sticking points is often the termite work. Once you include the Wood Destroying Pest Addendum in your contract, the lender requires that the work is done prior to close, and in some cases, prior to funding the loan. Without the termite clearance – proof that the property is clean – the lender will not approve your loan.

Typically, in southern California, the seller agrees to pay Section 1 items and the Buyer will be responsible for Section 2 items. Section 1 items are those that must be fixed, i.e., dry rot, termite infestation, etc. Section 2 items are things that are not a problem now, but may lead to a problem later. These are preventative measures. The lender normally is not concerned with Section 2 items, however I have heard of some lenders requiring Section 2 items to be repaired as well. Consequently, I advise my buyers not to agree to Section 2 items so that the lender doesn’t require they be completed. This is as simple as not checking the Section 2 box on the WPA form.

South Bay – Redondo Beach, Manhattan Beach, Hermosa Beach
In the South Bay, we do come across some challenges from time to time. Due to the fact that we have many properties that have 2 or 3 attached town homes, but no active HOA, a problem arises when the seller of one of the units has termites and needs to tent for fumigation. In order to tent, they have to tent the whole structure which includes his attached neighbor(s). But what if the neighbor doesn’t agree to tenting? You are forced to do secondary local treatment to eradicate the termites, but the lender might not accept this alternative treatment and the loan, and ultimately the deal, could be in jeopardy.

This can also be the case with two detached units that share the same gas line. Because you have to shut off the gas during fumigation, the neighboring unit must agree to this. It can make for a very sticky situation.

If there is no way to convince the neighbor to cooperate with the fumigation, the other option is to remove the WPA from the contract. Once the WPA is not part of the contract, the lender will not require the work. However, as a buyer, you must be comfortable with he fact that the termite work will not be completed and you may need to tent in the future if and when your neighbor is cooperative. You may want to negotiate a credit from the seller for the cost of the fumigation in exchange for removing it from the contract in order to close the deal.

The Obama administration has extended the Making Home Affordable Program until December 2015 in an effort to still help homeowners who are in danger of losing their homes to foreclosure. This also includes the Home Affordable Modification Program (HAMP) and Home Affordable Foreclosures Alternative program (HAFA). The former handles loan mods and the latter is for short sales.

South Bay

In the South Bay, we have seen far less REOs and short sales this year. However, there are still a number of homes in pre-foreclosure. Here are some current stats as of July 20, 2013:

Hermosa Fiesta
First and foremost is the Hermosa Fiesta from 10 am to 6 pm Saturday, Sunday and Monday. Come browse tons of vendors’ booths with trendy clothing, fine jewelry, col art, fun knick knacks, yummy food and more! There is a food court, beer garden and music. For more information go to www.fiestahermosa.net.

Hermosa Beach Firemen’s 17th Annual Pancake Breakfast
This is one of my favorite events. Pancakes and Firemen!!! Come join the Hermosa Fire Department for a pancake breakfast on Sunday, May 26th from 7 am – 12 pm at the Hermosa Beach Fire Department on Pier Avenue just below Valley. The cost is $10 for 13 yrs and older, $5 for 5-12 yrs, and free for children 4 yrs and younger. All proceeds from the breakfast go to local charities. Enjoy some good food with our local heroes and get a chance to see the inside of a firehouse!